UBS Securities is getting smacked down – again – for short sale shenanigans. OnWallStreet.com reports that the Securities and Exchange Commission fined the company $12 million on this issue. This comes on the heels of an $8 million fine from the Financial Industry Regulatory Authority.

The complaints that the SEC and FINRA had about UBS involved the company’s short sales recordkeeping. OnWallStreet.com reports that the SEC had issues with “inaccurate recordkeeping practices in providing and recording so-called ‘locates’ to customers seeking to execute short sales.” Now the problem, a reported violation of SEC Regulation SHO, reportedly has been fixed, according to OnWallStreet.com.

George Canellos, head of the SEC’s New York office, said that UBS “permitted its employees to create records that do not accurately convey the basis upon which its employees granted locates.” And the SEC’s order against UBS said that “UBS’ practices obscured inquiry into whether UBS had a reasonable basis for granting locates, and created a risk of located being granted based on sources that could not be relied upon if shares were needed for settlement.”

OnWallStreet.com reports that “over the past two years FINRA has fined Deutsche Bank $575,000; Milwaukee-based Robert W. Baird & Co. $900,000 and Boston-based National Financial Services $350,000 for violations of Regulation SHO. None admitted any wrongdoing.”

UBS may have had a difficult financial quarter, between a tough financial environment, and the loss of $2.3 billion due to one of its trader’s shenanigans, but the company’s wealth management operations “were a notable bright spot in an otherwise dismal earnings report,” InvestmentNews.com reports.

Robert McCann, head of UBS Wealth Management Americas, said in a memo to his staffers that even though the firm faced “reputational head winds,” UBS happened to be “in the midst of a meaningful turnaround.”

UBS showed more growth in wealth management earnings that its competitors Bank of America Merrill Lynch and Morgan Stanley Smith Barney did. While UBS isn’t close to reaching the $1 billion in profits goal that McCann set when he took over as CEO of UBS Wealth Management Americas in 2009, the revenue for the third quarter was $1.54 billion, which was a 2% increase from the previous quarter, and up 16% from last year’s third quarter.

The company also hired more financial advisors, picking up 51 over the third quarter, with 117 more than the previous year. They currently have 6,913 advisors. And for each advisor, UBS has $103 million in assets, more than any other such firm.

McCann wrote to staffers to congratulate them on “of the more impressive turnarounds I’ve witnessed in all my 30 years in financial services,” saying that UBS was “poised for even greater success.”

UBS Chairman, Kasper Villiger and interim CEO Sergio Ermotti said in an internal memo to UBS Wealth Management America employees, “Again: this business is not for sale.” “We want to reassure you that wealth management at UBS has a global footprint and is a core pillar of the firm’s integrated business model. The continued success of our Wealth Management Americas business is essential to maintaining that footprint and helping achieve our strategic vision.”

“UBS is committed to further developing our franchise in this important wealth market under (McCann’s) leadership,” Villiger and Ermotti wrote, adding that a successful U.S. wealth management business is “essential” to UBS’ strategy of operating as a global wealth manager, according to a recent article in Investment News.

There has been speculation in recent months that UBS might sell or spin-off itsU.S.brokerage arm. UBS officers have repeatedly denied that Mr. McCann’s unit is up for sale.

The $ 2.3 billion loss the London based trader allegedly caused will make it difficult for UBS’s wealth management business on many levels. This is an embarrassing incident for UBS. “The asset management business is about managing risks in volatile markets….If they can’t manage their own risks, how can they manage mine?” according to an article in Investment News.

Robert McCann and Robert Mulholland are highly regarded leaders. UBS currently is offering one of the strongest recruiting packages. Advisor headcount fell to almost 6,000 from 8,000 after the financial crisis. UBS was on a roll as their recent headcount is approximately 6,800. The rogue trading scandal could definitely impact financial advisor recruiting in the short term.

UBS announced that CEO Oswald Gruebel has resigned and that Sergio P. Ermotti will take over immediately until Gruebel’s permanent successor is identified.

UBS’s president, Kaspar Villiger said that the board regretted Gruebel’s decision to resign and that Gruebel “steps down having helped make UBS one of the world’s best capitalized banks.”

“Oswald Gruebel feels that it is his duty to assume responsibility for the recent unauthorized trading incident,” he said. “It is testimony to his uncompromising principles and integrity.”

UBS’ board tried to persuade Gruebel to stay on until the banks’ annual shareholder meeting next year, but Gruebel decided to step down now.

A London based UBS trader, Kweku Adoboli was arrested on September 15, 2011 and charged with fraud and false accounting for the $ 2.3 billion loss. Adoboli remains in jail until sometime later this month when he has a hearing.

Gruebel, who came out of retirement, was appointed CEO two years ago to help revive the fortunes of the Zurich-based bank, and achieved “an impressive turnaround and strengthened UBS fundamentally.” Gruebel arrived at UBS amongst the midst of the subprime meltdown and the embarrassing U.S. tax evasion case.

Gruebel steered the bank back to profit and resolved the U.S. tax evasion case. Gruebel accepted new Swiss government rules to hold far greater capital reserves to prevent a possible collapse during a banking crisis.

The wirehouses are always on the hunt for top talent. Experienced Financial Advisors are in demand and have been for some time. In 2005, the wirehouses employed 57,262 advisors and at the end of March 2011, the wirehouses employed 50,743 advisors. This represents a 12 % headcount decline over a five- year period.

The number of advisors at the “Big 4” UBS, Wells Fargo, Morgan Stanley Smith Barney and Merrill Lynch are stagnant at best. They used to poach from each other, but now that retention deals have been put in place and the pools are shrinking, the wirehouses are aggressively recruiting from alternate and multiple sources. Independent brokers, RIAs, brokers from boutique size financial firms, have all been targeted.

There are vast culture differences that still need to be overcome if the wirehouses plan to continue to recruit the Independent B-Ds. The wirehouses bring less freedom, layers of additional management, less access, and a lower payout. All this needs to be compensated for in the form of a nice “up front” check, and their superior support systems, and protection from regulation. Is that enough? It is rare to see an independent advisor move to the wirehouse world, according to many recruiters.

What can the wirehouse do?

The “Big 4” need positive press, and a lot of it, if they plan on luring brokers from the independent channels.

UBS announced that they plan to eliminate 3,500 jobs by the end of 2013.

UBS officials made a statement today that about 45 percent of the staff reductions will come from the investment bank, 35 percent from the wealth management and Swiss bank divisions, 10 percent reductions will come from asset management, and 10 percent staff reductions will come from the Wealth Management America unit.

These cost cutting measures will include administrative units as well as some changes in the use of real estate. CEO, Oswald Gruebel’s goal is to reduce annual costs by $ 2.5 billion by the end of 2013.

UBS’s profit dropped nearly 49 percent in the second quarter.

UBS is not alone in announcing job cuts. Credit Suisse Group has announced its’ plans to shed 2,000 jobs. HSBC is preparing 30,000 pink slips. Bank of America/Merrill Lynch also has plans to lay off up to 3,500 people as well.

According to an article in Investment News, a four man team of financial advisers from UBS Financial Services has joined the Palm Beach Complex of Bank of America Merrill Lynch. This team manages $ 277 million in assets with a trailing 12 production of $ 2.5 million and will report to Merrill Lynch managing director James Chahine.

“The move registers as one of the largest moves of the last 60 days according to the Investment News Advisers on the move database.”

Recruiting Financial Advisers within the wirehouses has been slow this year. The main reason is that a large percentage of advisers are still under their retention packages signed two to three years ago.

As the retention packages are worked off, recruiters expect to see more advisers explore their options after summer.

Bank of America was rated the number one wealth management firm for the second year in a row, according to an article in Investment News. Bank of America had 1.9 trillion in Assets under Management with 4.2 % change from last year at year end 2010.

Morgan Stanley Smith Barney was rated the second wealth management firm with 1.6 trillion in assets under management. UBS was rated number three with 1.6 trillion in assets under management. Wells Fargo was rated the fourth wealth management firm with 1.4 trillion in assets under management.

According to an article in Investment News, “market gains helped boost assets managed by these banks by 11 percent last year with the top 20 overseeing a combined $ 11.1 trillion, Scorpio said. The rate of net new money inflows declined on average by almost 19 percent from 2009 and many banks saw margins squeezed, according to Scorpio.”

According to Investment News, MSSB can’t cut costs by lowering broker pay because McCann and Krawcheck are on the prowl for MSSB talent.

According to the article, Brad Hintz, an analyst at Sanford C. Bernstein & Co. said in an interview with Tom Keene on Bloomberg Radio’s Bloomberg Surveillance, that, “Morgan Stanley Chief Executive Officer James Gorman can’t cut expenses at the joint venture with Citigroup Inc.’s Smith Barney as fast as he would like because “he’s being checkmated by Sallie Krawcheck and Bob McCann.””

Hintz also stated, “Investors and analysts have been disappointed by the speed of the Morgan Stanley Smith Barney integration. The unit posted a pretax margin of 9 percent in 2010, less than half of Gorman’s goal of more than 20 percent. “Bank of America’s wealth and investment management division, which includes Merrill Lynch brokerage and U.S. Trust, had a margin of about 15 percent.

All of the wirehouses are still competing fiercely with one another to attract top talent.

It’s a good time to be a financial advisor, if you’re considering a transition.